–FOMC’s June 23 Statement Follows for Comparison
WASHINGTON (MNI) – The following is the text of the statement
released Tuesday by the Federal Open Market Committee after its monetary
policy meeting. The statement from the June 23 meeting follows for
comparison:
Information received since the Federal Open Market Committee met in
June indicates that the pace of recovery in output and employment has
slowed in recent months. Household spending is increasing gradually, but
remains constrained by high unemployment, modest income growth, lower
housing wealth, and tight credit. Business spending on equipment and
software is rising; however, investment in nonresidential structures
continues to be weak and employers remain reluctant to add to payrolls.
Housing starts remain at a depressed level. Bank lending has continued
to contract. Nonetheless, the Committee anticipates a gradual return to
higher levels of resource utilization in a context of price stability,
although the pace of economic recovery is likely to be more modest in
the near term than had been anticipated.
Measures of underlying inflation have trended lower in recent
quarters and, with substantial resource slack continuing to restrain
cost pressures and longer-term inflation expectations stable, inflation
is likely to be subdued for some time.
The Committee will maintain the target range for the federal funds
rate at 0 to 1/4 percent and continues to anticipate that economic
conditions, including low rates of resource utilization, subdued
inflation trends, and stable inflation expectations, are likely to
warrant exceptionally low levels of the federal funds rate for an
extended period.
To help support the economic recovery in a context of price
stability, the Committee will keep constant the Federal Reserve’s
holdings of securities at their current level by reinvesting principal
payments from agency debt and agency mortgage-backed securities in
longer-term Treasury securities.1 The Committee will continue to roll
over the Federal Reserve’s holdings of Treasury securities as they
mature.
The Committee will continue to monitor the economic outlook and
financial developments and will employ its policy tools as necessary to
promote economic recovery and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A.
Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K.
Tarullo; and Kevin M. Warsh.
Voting against the policy was Thomas M. Hoenig, who judges that the
economy is recovering modestly, as projected. Accordingly, he believed
that continuing to express the expectation of exceptionally low levels
of the federal funds rate for an extended period was no longer warranted
and limits the Committee’s ability to adjust policy when needed. In
addition, given economic and financial conditions, Mr. Hoenig did not
believe that keeping constant the size of the Federal Reserve’s holdings
of longer-term securities at their current level was required to support
a return to the Committee’s policy objectives.
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The following is the FOMC statement released June 23, 2010:
Information received since the Federal Open Market Committee met in
April suggests that the economic recovery is proceeding and that the
labor market is improving gradually. Household spending is increasing
but remains constrained by high unemployment, modest income growth,
lower housing wealth, and tight credit. Business spending on equipment
and software has risen significantly; however, investment in
nonresidential structures continues to be weak and employers remain
reluctant to add to payrolls. Housing starts remain at a depressed
level. Financial conditions have become less supportive of economic
growth on balance, largely reflecting developments abroad. Bank lending
has continued to contract in recent months. Nonetheless, the Committee
anticipates a gradual return to higher levels of resource utilization in
a context of price stability, although the pace of economic recovery is
likely to be moderate for a time.
Prices of energy and other commodities have declined somewhat in
recent months, and underlying inflation has trended lower. With
substantial resource slack continuing to restrain cost pressures and
longer-term inflation expectations stable, inflation is likely to be
subdued for some time.
The Committee will maintain the target range for the federal funds
rate at 0 to 1/4 percent and continues to anticipate that economic
conditions, including low rates of resource utilization, subdued
inflation trends, and stable inflation expectations, are likely to
warrant exceptionally low levels of the federal funds rate for an
extended period.
The Committee will continue to monitor the economic outlook and
financial developments and will employ its policy tools as necessary to
promote economic recovery and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A.
Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K.
Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas
M. Hoenig, who believed that continuing to express the expectation of
exceptionally low levels of the federal funds rate for an extended
period was no longer warranted because it could lead to a build-up of
future imbalances and increase risks to longer-run macroeconomic and
financial stability, while limiting the Committees flexibility to begin
raising rates modestly.
** Market News International Washington Bureau: 202-371-2121 **
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